HARRISBURG – On Thursday, the state House passed pension reform legislation with bipartisan support that would reduce the unfunded liability by $5 billion and provide all new state and school district employees with three plan options, including two hybrid choices and a defined contribution-only plan. The bill now awaits Gov. Tom Wolf’s signature.

Existing employees who wish to opt in to one of the new plans would be permitted to do so. For anyone who does not expect to be vested before leaving, this is an attractive opportunity.

“Pennsylvania taxpayers are facing a combined unfunded liability of about $62 billion for the State Employee Retirement and Public School Employee Retirement systems. The legislation would create a plan for new state employees that are hired on or after Jan. 1, 2019, for SERS and July 1, 2019, for education system employees. These three options would be available to the new employees:
• A side-by-side defined benefit/defined contribution hybrid plan with a 1 percent accrual rate.
• A side-by-side defined benefit/defined contribution hybrid plan with a 1.25 percent accrual rate (this will be the default plan if no election is made by the employee).
• A defined contribution-only option.
“Because this bill would slow the accumulation of unfunded liability, it is a first step in the right direction. Our biggest concern going forward is continued growth of unfunded liability of benefits that have already been promised, and once the system is reformed the bill for unfunded liability must be paid.

“While frustrating, the wheels of legislation sometimes move incrementally to address large problems. We must take the opportunities presented to us. The governor has indicated he will sign Senate Bill 1. The time is now. We can no longer put this off and hope that our children or their grandchildren will find a way to fix it.”
Lancaster County House Republican Delegation
Pennsylvania House of Representatives
Media Contact: Charles Lardner
clardner@pahousegop.com